The Northwest Company has filed for Chapter 11 bankruptcy protection....

The Northwest Company has filed for Chapter 11 bankruptcy protection. The company is headquartered in Roslyn. Credit: chris ware

The Northwest Company LLC, which built a reputation for selling blankets with sports team logos,  has filed for Chapter 11 bankruptcy protection. 

The Roslyn-based business says it is the number one manufacturer of blankets and throws in the U.S., but noted in court papers filed last month that tariffs and product shortcomings restricted its cash flow before the coronavirus hit.

Northwest will seek another round of financing from one of its existing lenders on top of the $29.16 million it has in secured debt, according to court filings. The bedding, blanket and textile giant indicated it owes about $57 million to others, including the National Football League and Disney. 

Northwest and its attorneys did not respond to requests for comment.

  Without additional borrowing, the company "will not have sufficient liquidity to continue to fund [its] operations, fund employee payroll and benefits obligations, pay vendors of necessary goods and services, and satisfy other operational requirements," Northwest CEO and president Ross Auerbach said in a declaration. 

The company employs about 118 people, according to a court filing.

Concerns with product and supply quality as well as higher tariffs have dogged the company for years, according to Auerbach.

In 2017, The Northwest Company acquired a sports-branded backpack and accessories line sold primarily through Walmart, but "quality control issues" cut into sales and the products were less profitable than anticipated, Auerbach noted in his declaration. 

Then the caliber of material from Ashford Textiles USA LLC,  a key Northwest vendor, lagged enough that Walmart reduced, and ultimately canceled, Northwest’s part in a youth bedding program, according to Auerbach.

Northwest's struggles deepened when the federal government imposed a 25% tariff on bags and backpacks imported from China in 2018, according to court filings.  The coronavirus public health crisis and declines in the retail sector exacerbated the company's issues, the filings noted.

Northwest and its subsidiary The Northwest.com LLC are now seeking additional financing from CIT Group/Commercial Services Inc. The two businesses entered credit and security agreements in 2008, which has given Northwest access to $19.16 million in debt backed by liens and security interests involving substantially all of Northwest's assets, according to Auerbach's declaration. 

Northwest also has a $10 million promissory note from Ashford Textiles LLC, which Northwest is obligated to make interest payments on but cannot pay back until it settles its obligations with CIT Group. There is also a pending lawsuit in California in which Ashford Textiles LLC alleges Northwest breached their contract.

In addition to the promissory note with Ashford, Northwest has about $57 million outstanding with vendors and creditors, including the NFL, Disney, Major League Baseball and Marvel, court papers show.

Auerbach previously told Newsday his parents launched Northwest from their Roslyn home in 1987, before sports merchandise was big business.

The textile company has grown to include a showroom in Manhattan, a second corporate office in Arkansas, a sourcing office in Shanghai and a weaving facility in North Carolina, according to court filings.

Get the latest news and more great videos at NewsdayTV Credit: Newsday

Concern over Nassau, ICE partnership ... SALT negotiations ... Fitness Fix: Deer Park Athletic Club ... Get the latest news and more great videos at NewsdayTV

Get the latest news and more great videos at NewsdayTV Credit: Newsday

Concern over Nassau, ICE partnership ... SALT negotiations ... Fitness Fix: Deer Park Athletic Club ... Get the latest news and more great videos at NewsdayTV

FLASH SALE

$1 FOR ONE YEAR

Unlimited Digital Access

SUBSCRIBE NOW >>Cancel anytime - new subscribers only